(1) provides a historical review of statements made by various officials concerning taxes and the cost of the new center,

(2) includes CitizensForTaxFairness.org’s observations and recommendations as well as suggestions for citizen action,

(3) reprints sections of a hard-hitting editorial from the (Ogden) Standard Examiner which starts out “If you are a resident of south DavisCounty and were looking forward to enjoying the benefits of a $20 million rec center designed to serve your communities, you should be livid.”

Official Statements on RecreationCenter Taxes and Construction Costs

TAXES

In the May 2004 Bountiful City Newsletter, Mayor Johnson wrote:“On the average ($180,000 assessed value) home the property tax cost would be approximately $3 per month, with future new growth in all of those cities projected to lower that cost over time.”

The official Voter Information Pamphlet that was drafted by Bountiful City Manager, Tom Hardy and distributed at tax payer expense to all registered voters just prior to the August 2004 bond election stated: “Property taxes to build the center and operate and maintain it will be about $40 per year on a home with an assessed value of $180,000…” (Note that this official document clearly states that about $40 per year will cover both the cost of construction and operation and maintenance.)

Immediately before the election, Mathew Flitton, a reporter for the Ogden­Standard-Examiner, wrote:“If approved, property taxes on a home worth $180,000 would increase by about $38 annually.It will also cost homeowners an additional $12 or $13 annually to provide the $500,000 in operation and maintenance costs for the center.” Thus, according to Mr. Flitton’s calculations, the total tax would be about $51.(Standard Examiner, Sat, July 31, 2004, Bountiful residents divided on rec center vote and again on August 3, 2004, Davis County votes on Bountiful rec center).

The actual rate levied by the South Davis Recreation District Board is $39 for the bond payment and $14 for operations and maintenance. That’s a total of $53 or just $2 (roughly 4%) more than what Mr. Flitton reported.However, the rate imposed by the District is 47% higher than what Mayor Johnson told his citizens and 33% higher than the official Voter Information Pamphlet told voters that it would be.

CONSTRUCTION COSTS

A review of the record indicates that officials of the five cities building the rec center and their advisors consistently understated the true cost of the new SouthDavisRecreationCenter. All of the following quotes are from the Davis County Clipper. Bolding and comments have been added.

July 1, 2004: A recently formed tax-watch group calling themselves Citizens for Tax Fairness (CTF) last week told the Clipper that the movement to build a new recreation center has not been adequately studied, is too expensive and has “suddenly” popped up with little time before a special election.

Not so, say [Bountiful Mayor] Johnson and [Bountiful City Manager] Hardy who, both support the project. They contend that the issue has been meticulously studied, is in balance between facility demand versus price and has been on the public docket for an extended period of time.

“If these people had done their homework and participated in the process,” Hardy said, “they would have had answers to their questions. They took the book (master plan for the proposed facility) home for one night. We’ve been studying it for two-and-a-half years.” (Comment: Apparently the 2 ½ year study failed to factor in the possibility of higher construction costs.As reported in the Standard Examiner editorial found below, major construction firms such as the Boyer Company, Okland and Big-D report that over the past two years it's been necessary to forecast significant price increases for the raw materials of the construction trade).

January 22, 2005: “The bad news is that even before construction has started, the new South Davis rec center is $600,000 over budget. The good news is that Brent Tippets of VCBO Architectural says being overbudget at this stage isn’t unusual…. Tippets said the board shouldn’t yet consider eliminating any contingencies, however. He added that the project shouldn’t get higher than $20 million.” (Comment: Less than six months later the project was $2.7 million over budget).

May 12, 2005: “Faced with spiraling construction material costs, the South Davis Recreation District has reduced the size of its new center. But district board Chairman Joe Johnson emphasized the reductions were “things we felt we could reduce and not affect the quality of the facility or the programming. “The patrons when they go in will not notice the reductions,” he told the Clipper. To keep costs in line with bond funds approved by voters last August, the size of the facility will be reduced from about 160,000 square feet to 140,000 square feet.”

July 14, 2005: “Preliminary construction work may be under way at the SouthDavisRecreationCenter site, but final plans are still being mulled over and “fine-tuned.” That’s because, faced with a 20 percent escalation in construction material costs, funds just won’t stretch as far, said Bountiful Mayor Joe Johnson….“It’s a challenge, no question about it. I’m still tremendously optimistic. We’ll end up with a good pool, good ice skating rink, exercise area. It just won’t be as spacious,” he said. After various bids were assembled within the last weeks, a shortfall of at least $2 million was calculated.

CitizensForTaxFairness.org’s Observations

CitizensForTaxFairness.org notes that Mayor Johnson and City Manager Hardy, two exceptionally astute and competent individuals, consistently understated the actual tax rate throughout the period running up to the bond election.

Given their expertise and years of government experience, the only plausible explanation for this huge discrepancy may be that Mayor Johnson and Mr. Hardy deliberately chose to exclude the $14 operations and maintenance tax from the rate given to the public prior to the election.A much less plausible explanation would be that these two highly competent professionals were unable to accurately calculate the rate whereas a newspaper reporter was able to hit it right on the head.

In either case, if Mayor Johnson and Mr. Hardy cannot find a way to get by on the $36 or $40 that they told us it would cost for the new center, then they should seriously consider resigning from the South Davis Recreation District board.After all, if they deliberately provided false information to the voters or if they were incapable of accurately calculating a tax rate, they should no longer be trusted to manage this nearly $25 million project.

CitizensForTaxFairness.org has consistently pointed out that the design for the new recreation center was ostentatious and too costly. Also, following the first meeting of the newly appointed South Davis Recreation Center Board, we emphatically argued that prior to construction, a competitive bidding process should have been used to select an architect rather than giving a no-bid contract to the firm that established the original design and cost estimates. At a minimum, before bonds were issued and work begun, a complete review of the project’s cost should have been commissioned by the Board.

However, the Board ignored our advice and charged full speed ahead. They issued the bonds without doing a complete, updated price analysis of the recreation center. They issued the contract for a construction manager without doing a complete, updated price analysis of the project. They even began construction without doing a complete, updated price analysis of the project. And then, even after reducing the size and scope of the center as presented to the public prior to the election, when they finally did get solid bids for the center, they found themselves $2.7 million short.

In order to cover the shortfall and to build a gym for the school district, according to the Salt Lake Tribune, BountifulCity came up with over six million dollars in taxpayer’s cash from the city’s treasury.CitizensForTaxFairness.org asks why, if the city officials had this much taxpayer money available, didn’t they pay cash for Bountiful’s portion of the new center rather than creating a special taxing district and assessing millions of dollar of new taxes on Bountiful citizens?

What Now?

1. Let your friends and neighbors in the five cities that make up the South Davis Recreation District (Bountiful, Centerville, NorthSaltLake, West Bountiful and Woods Cross) know what is going on with the new recreation center taxes and construction costs.

2. Let current members of the South Davis Recreation District board (see below) know that you expect them to honor all of the commitments made prior to the August 2004 election. This is an important point since board members appear to believe that the past promises and statements are irrelevant and that they have the authority to take as much money from the taxpayers as possible.

3. Contact the newly elected mayors (Centerville - Ron Russell - 295-3745, West Bountiful - James Behunin – 292-5151, Woods Cross - Kent Parry – 298-5306) and ask them to replace their city’s current representative on the South Davis Recreation District board with someone who will represent the taxpayer’s interest and respect promises made prior to the election.

4. If you haven’t already done so, sign up for CitizenForTaxFairness.org alerts and Updates.

If you are a resident of south DavisCounty and were looking forward to enjoying the benefits of a $20 million rec center designed to serve your communities, you should be livid.

Somebody -- or perhaps it was a group of people -- got the numbers wrong by $2.7 million when estimating the budget for the facility's construction costs. Already, the rec center's 160,000-square-foot size has been reduced to 140,000 square feet.

- snip -

Officials blame the rising costs of fuel and construction materials for the soaring budget.

But failure to anticipate what's turned out to be a 13 percent jump in the overall costs over original estimates in a year's time -- voters approved the rec center bonds in August 2004 -- reveals the original estimates were anything but carefully considered.

We spoke about the art of anticipating construction-materials pricing with executives from The Boyer Co., a developer that builds business parks and shopping centers, and Big-D Construction and Okland Construction, which build all manner of large projects in Utah.

They told us that while it's anything but an exact science, given the volatility of construction materials prices over the past two years -- since the Chinese and Indian economies have super-heated -- it's been necessary to forecast significant price increases for the raw materials of the construction trade.

For example, steel has been up and down -- but mostly up -- for two years. Likewise, concrete is up 40 percent over a year ago. And plywood has been up and stayed high because no new facilities have been built to manufacture more plywood to meet increased demand.

- snip –

This much, though, is certain: The situation is a mess. Taxpayers are suddenly on the hook for more than they were told -- to the tune of millions of dollars, perhaps -- and someone should be held accountable.